Canadians continued to rack up debt in the second quarter of the year as they took advantage of low interest rates, Statistics Canada said Tuesday.
The ratio of credit market debt to personal disposable income crept to 148.7 per cent in the July-September period, topping the old record of 147.3 set in the previous quarter. Credit market debt includes mortgages and consumer loans.
Statistics Canada said the ratio increased as the expansion in credit debt surpassed growth in disposable income.
Household indebtedness has been a source for worry for policymakers with Bank of Canada governor Mark Carney and Finance Minister Jim Flaherty both sounding warnings in recent months. They've warned that Canadians who have become accustomed to taking advantage of relatively cheap money must tighten their belts in anticipation of the return of rising interest rates.
When those rates will eventually go up is a question mark. The central bank said last week that inflation pressures are benign, so it can keep its benchmark interest rate steady at one per cent as the global economy continues to struggle.The bank has stood firm at that level through eight consecutive interest rate decisions.
Statistics Canada also reported that household net worth per capita fell from $185,500 in the first quarter to $184,300 in the second quarter, marking the first decline since the second quarter of 2010.
Overall household net worth fell as the increase in residential real estate value was swamped by a fall in the value of household holdings of equities, including mutual funds, and pension assets.The benchmark S&P/TSX Composite Index shed 5.9 per cent during the second quarter.